Tabor v. Universal Exploration Co.

• Decision Date: 30 March 1931
• Docket Number: No. 8739.,8739.
• Parties: TABOR v. UNIVERSAL EXPLORATION CO.
• Court: U.S. Court of Appeals — Eighth Circuit

48 F.2d 1047 (1931)

TABOR v. UNIVERSAL EXPLORATION CO.

No. 8739.

Circuit Court of Appeals, Eighth Circuit.

March 30, 1931.

Allen McReynolds, George J. Grayston, and Charles M. Grayston, all of Joplin, Mo., for appellant.

Haywood Scott and A. E. Spencer, both of Joplin, Mo., for appellee.

Before STONE and VAN VALKENBURGH, Circuit Judges.

VAN VALKENBURGH, Circuit Judge.

Appellee is a New Jersey corporation licensed to do business in the state of Missouri and engaged in mining operations at Joplin in said state. Some time prior to May 14, 1927, appellee was named as lessee in a mining lease covering the following described property:

"All of the Southeast Quarter (S. E. ¼) of the Northwest Quarter (N. W. ¼) of Section Fourteen (14) Township Twenty-nine (29) Range Thirty-four (34) containing Forty (40) acres more or less."

On the last-named date appellant and appellee entered into a contract whereby appellant agreed to buy all the right, title, and interest of appellee in and to said property above described, and also in and to a certain concentrating plant in said contract described, "including all buildings, scales, office, power-plant, pumps, and all mining and concentrating machinery in said plant, and in the underground workings of said mine, and all tools and other equipment and personal property belonging to and used in connection with said mill and mine, and now upon said land."

The consideration stated was a cash payment of $10,000, a second payment of $20,000 on or before ninety days from date of contract, and thereafter additional payments at stated periods, making the entire purchase price, including the initial payment, total $75,000. Coincident with the execution of this instrument, appellee agreed to and did deposit in escrow with the Conqueror Trust Company of Joplin, Mo., a proper assignment of the lease in question and a proper bill of sale transferring the other property above described, to be delivered to appellant when the purchase price should be fully paid, and with instructions to the escrow agent to return said instruments to appellee as and when "appellant shall fail to pay any installment, together with interest thereon, where interest is provided to be paid, in accordance with the terms and provisions of this contract, and upon the date specified herein." This contract of May 14, 1927, contained the further explicit conditions:

"In the event the Party of the Second Part shall fail to make any payments provided herein, as, and when, due this contract shall thereupon terminate, and the Party of the Second Part shall immediately surrender the peaceable possession of said land lease, mine, buildings, machinery, tools, equipment and other property to the Party of the First Part, save and except ore then in the bin, and shall not be liable to the Party of the First Part for any of the unpaid installments, and the Party of the First Part may retain all payments theretofore made as liquidated damages for the failure of the Party of the Second Part to make said payments, as herein specified.

"The Party of the Second Part agrees that in the event he shall fail to carry out and perform any of the provisions of this agreement, as herein provided to be kept and performed by him, or shall fail to perform and carry out any of the terms and provisions of the mining lease above mentioned as therein specified, he will at the request of the Party of the First Part quit and surrender the peaceable possession of said land, mine, mill, buildings, tools, machinery and equipment, and also agrees that, if he shall elect not to continue the payments herein provided to be made by him he will immediately quit and surrender the peaceable possession of said land, mine, mill, buildings, tools and machinery and equipment to the Party of the First Part.

"Party of the Second Part agrees that, upon any such termination of this contract because of his election to quit and surrender same, or because of his violation of any of the terms and provisions of this agreement, or of the lease above mentioned, he will return said mine, mill, buildings, machinery, tools and equipment to the Party of the First Part in the same condition he shall have received them, ordinary wear and tear alone excepted."

February 2, 1928, appellee made written demand upon appellant for all the property in his hands, possession of which had theretofore been delivered under the provisions of the contract of May 14, 1927, and upon the escrow agent for the return of the instruments deposited with it. The stated grounds for these demands were that appellant had failed to carry out and perform the provisions of said written contract, had failed to pay, as and when specified, the installments of the purchase price provided therein, had failed to perform and carry out the terms and provisions of the mining lease, "having elected not to continue the payments due said Universal Exploration Company as provided in said contract dated May 14, 1927, and thereby having relieved yourself of making any further payments due said Universal Exploration Company provided in said contract to be made by you." On the same day receipt of this demand was acknowledged by appellant in the following language:

"The undersigned acknowledges receipt of your demand for possession of the land and property therein described, to-wit: The Southeast Quarter of the Northwest Quarter of Section Fourteen, Township Twenty-nine, Range Thirty-four, in Jasper County, Missouri, including mine, mill, buildings, tools, machinery, and equipment also mentioned in said demand, dated February 2, 1928, and hereby surrenders possession of the said land and property demanded in accordance therewith; reserving the right to prosecute the pending suit or any other appropriate action to recover the amounts theretofore paid on the purchase price of said property and expenditures made thereon."

It appears from the record that, at the time this demand was made, and receipt thereof acknowledged, there was pending a suit by appellant against appellee "based upon charges of fraud in the inducement to the contract." That suit was filed November 14, 1927, and was dismissed without prejudice subsequently to February 2, 1928. The suit now on appeal was then filed, and upon demurrer the court held that the original petition stated a case in tort, and the demurrer was overruled. However, on June 17, 1929, appellant filed an amended petition, which is long and somewhat involved. It recites the assignment of this lease and the bill of sale from appellee to appellant, that appellee falsely and fraudulently, for the purpose of deceiving appellant and inducing him to purchase the said lease and other mining property, represented that the pay ore in said mine was not exhausted and that the falls, drifts, and underground workings in said mine showed, in place, ores of a percentage averaging above 4.03 percentage recovery; such ore being and appearing in all the drifts to such an extent and in such condition as to enable an operator profitably to resume operations upon the ore then in sight, and that drilling ahead of the workings showed the continuation of ore of as high a percentage and in such quantities that, after leaving sufficient pillars, ore could be profitably produced therefrom to the extent of not less than nine thousand tons of concentrates; that, if this had been true, the property would have been well worth the purchase price; that these representations were false and known so to be by appellee which had theretofore operated the mine, had cut and removed therefrom all the pay ore showing therein sufficient to justify further operations, and had abandoned the property, shut down the pumps, and allowed the underground workings to fill with water. The amended petition states that appellee, in furtherance of its wrongful purpose, refused to give appellant an option or opportunity to investigate the mining property after drainage, falsely represented that other prospective purchasers were willing and ready to take the property, and by these and other means induced appellant to close the transaction in reliance upon the representations made. Appellant states that he made the cash payment of $10,000, entered upon the property, and undertook to operate it, went to considerable expense in that behalf, and paid the second installment of $20,000 before he ascertained that the actual conditions of said mine were and are such that the same is not and was not reasonably worth any sum whatsoever, except as to the value of the tangible property, which will not exceed the sum of $10,000. He therefore elected to go no farther with the enterprise. There followed the demand, the acquiescence therein, and the return of the property in accordance with the terms of the contract as hereinabove set out. While pleading this situation in connected form, appellant states that, while his original suit was pending, he learned that the assignment of this lease to appellee's immediate predecessors in title was void because of the failure of the Butte-Kansas Company, their grantor, to comply with the laws of Missouri governing the transaction of business in said state by foreign corporations; that for this reason this so-called mining lease was void, and that appellant acquired no title in it; that, if appellee had knowledge of this situation, it concealed the same, and, if it had no such knowledge, the contract was entered into by mutual mistake. The petition concludes with the following allegations respecting appellant's conceived grounds of recovery:

"Plaintiff further states that by reason of the fraud and misrepresentations aforesaid in the inducement to the plaintiff to enter into said contract, and the payment by the plaintiff to the defendant of the sum of Thirty Thousand Dollars ($30,000.00) prior to knowledge or...